KIWI JUMPS AFTER SOLID Q2 GDP NUMBERS

The New Zealand dollar rose sharply against the greenback after the country released better-than-expected GDP numbers. In the second quarter, the economy expanded at an annualized rate of 2.8%, which was better than the expected 2.5%. It was also better than the average GDP growth of 2.7%. The previous reading was 2.5%. On a quarter-on-quarter basis, GDP expanded by 1.0%, which was better than the expected 0.8%. The officials from the bureau of statistics said that the growth was broad based with service industry growing. 15 out of 16 sectors recorded growth with the agricultural sector recorded the fastest growth rate since 2014.

Sterling remained higher against the euro and the US dollar after positive inflation numbers from the UK. Yesterday, data from the Office of National Statistics (ONS) showed that the price of consumer goods rose by 2.7%, which was better than the expected 2.4% gain. On a month-on-month basis, CPI rose by 0.7%, which was better than the expected 0.5%. Key contributors to the inflation were energy prices and food products, which are considered volatile. Today, the UK will release the retail sales which will be closely watched. Traders expect retail sales to grow at an annual rate of 2.3%, which will be lower than the expected 3.5%. Core retail sales are expected to rise by 2.5%.

The Swiss Franc yesterday eased ahead of today’s interest rate decision by the SNB. The USD/CHF is now trading at 0.9668, which is higher than the four-month low of 0.9600, which was reached earlier this week. The SNB is expected to leave rates unchanged. However, its decision will weigh heavily on the franc. The bank said previously that the franc is overvalued against the USD. If opinions change, the franc is likely to move up significantly.

USD/CHF

The USD/CHF pair reached a bottom of 0.9599 yesterday. It then started a rally that saw it reach a high of 0.9699. As the pair moved up, so did the MACD, which crossed past the zero-line and reached the highest level since Monday last week before starting to ease. The current price is also above the important support level shown below. After the SNB, the pair is likely to test the 0.9700 or the 0.9600 levels.

NZD/USD

The NZD/USD pair jumped sharply after the latest GDP numbers. It reached an intraday high of 0.6650, which is the highest level since August 31 as traders hoped that the RBNZ will move to hike rates. The MACD reached the highest level since August 22 as the price traded along the upper band of the Bollinger Bands. If the current upward trend continues, the pair is likely to continue moving up to test the 0.6700 level.

EUR/USD

The EUR/USD pair was little moved in the Asian session. It is trading at 1.1678, which is the middle band of the Bollinger Bands. The pair has remained within this range for the past two days. As shown below, the diagonal trend line and the horizontal resistance level are nearing an apex. This means that the pair is likely to see a major breakout as traders wait for the Fed’s decision in the coming week.